To my knowledge, WDS does not work together with WPA on the WL-500g (and the Siemens SE505/515, which I'm using too). But it should be possible in principle using the right software as you can read following this link.
I solved the security problem by breaking up the bridge between LAN and WLAN and configuring iptables to block traffic. Clients on the WLAN use OpenVPN to access my internal network. The clients on the WLAN should have personal firewalls enabled as if they where accessing the internet directly.
Werner
http://flexblog.deburau.de/index.php?cat=3
